Bitcoin: 12 Hours of Pillage, Murder and Exhilaration

Bitcoin’s last 12 hours have been a psych ward of paranoid price schizophrenia.

For anyone who walked away after yesterday’s Senate Department of Homeland Security Committee hearing on virtual currencies (read: Bitcoin) adjourned with BTCUSD just above $700, this morning’s print around $570 is shocking enough.

But that would be missing the cultic cryptocurrency’s (can we can call devotees Bitbugs? Abitcoinados?) moar vertical launch to a Mt. Gox-traded high of $900.98. Since that tick at 8:12 p.m. ET (it’s appropriate to measure so precisely, as we’ll see in a moment), BTCUSD has lost 33.4% of its value. Just an hour ago, it toppled to a morning low of $502.62, or -44.2% of its high less than 12 hours earlier. This makes the already staggering figures we cited in Saturday’s piece about The Next Bitcoin Blow Off look virtually unremarkable.

Bitcoin (BTCUSD) – The Last 12 Hours (click image to zoom)

Now how’s that for fundamental stability as a mass consumer payment method, Senator Carper?

Though it might stagger the imagination, Bitcoin’s volatility isn’t unheard of. Some penny stock somewhere on Pink sheets or on Over-the-Counter Bulletin Board (OTC:BB) installs (and deinstall) a move like this every single trading day. Or look at this year’s tech IPOs; or Zulily (ZU), +71% on it first day of trade last week.

The difference between Bitcoin and pump-and-dump penny stock candidate X is its wide interest, fascination over its novelty, and the liquidity its infrastructure all but assures. That makes the violence tussling of its last 12 hours particularly noteworthy.

Are these growing pains on its way to stability and broad acceptance? Or is the tenuous legacy Bitcoin is struggling to slough off after Silk Road’s closure being traded for institutionalization and de-facto centralization by concentration of its supply in the hands of a few (e.g. China)?